The structure of the market for physicians' services

In this paper, structural equations for the supply of and the demand for general practitioners' services are derived. Two variants of the model, based on alternative specifications of the role of health insurance, are tested, using data drawn from the American Medical Association's Eighth Periodic Survey of Physicians (PSP8). While results of the estimation require the rejection of the hypothesis that the market for general practitioners' service is perfectly competitive, the elasticities of demand implied are quite high. Estimates of the supply relationships support the presence of "backward bending" supplies of physicians' services, but this finding should be interpreted cautiously.